Annual Report 2017

Celebrating a history full of achievements and challenges, in 2017, Braskem
commemorated its 15th anniversary with important accomplishments made
possible by a business strategy focused on expanding internationally into new
markets, capturing operating efficiency gains, constantly seeking innovative
solutions for clients, supported by its constant focus on people and on
enhancing its governance and compliance standards. The company
thus embarks on a new growth cycle supported by the aspiration
to become a global reference in the petrochemical industry.

The Annual Report covers the company’s relevant topics
for the period from January 1 to December 31, 2017,
and was prepared in accordance with the
framework of the Global Reporting
Initiative, version G4.

Profile

Sustainability Strategy

Since its founding, Braskem has sought to align its growth strategy with processes and initiatives that minimize any social and environmental impacts. As such, in 2016, we formulated our core strategy center around ten strategic macro goals linked to the 17 Sustainable Development Goals (SDGs) of the United Nations, and established targets for the results to be achieved by 2020. In 2017, we continued these efforts and met in advance the target for two very important aspects of the current environmental scenario: Water Efficiency and Climate Change. Read on to learn about all the macro goals and the progress made to date by Braskem:

Safety

Be a reference in the world chemical industry in chemical, occupational and process safety.
2017 Result: 98%
2020 Target: 100%

WATER EFFICIENCY

Be a reference in the use of water resources in the global chemical industry in water consumption and water reuse.
2017 Result: 100%
2020 Target: 100%

POST-CONSUMER WASTE

Be one of the world’s five largest sellers of polyethylene and polypropylene with recycled content among the petrochemical companies that manufacture polyolefins. And become a relevant driver of the growth in plastic recycling in Brazil, supporting the achievement of the targets of the Packaging Industry Agreement.
2017 Result: 1%
2020 Target: 100%

LOCAL DEVELOPMENT

Reach an "excellent" level of reputation in the Citizenship Dimension of the Retratam Pulse, demonstrating recognition by local Communities and Society in general for the contributions made to improving human development.
2017 Result: 81%
2020 Target: 100%

ECONOMIC-FINANCIAL
RESULTS

Be one of the world’s three largest thermoplastic resin producers, and guarantee profitability levels that sustain the perpetuity of the business and its investment grade rating from the three main international rating agencies.
2017 Result: 73%
2020 Target: 100%

CLIMATE CHANGE

Be one of the world’s best large chemical producers in terms of greenhouse gas emissions intensity, maintaining the use of renewable feedstocks.
2017 Result: 100%
2020 Target: 100%

DEVELOPING
SOLUTIONS

Be recognized as a company that supports its Clients in the development of environmental and social solutions in Chemicals and Plastics, achieving a “strong” level of reputation through its products and services.
2017 Result: 91%
2020 Target: 100%

STRENGTHENING PRACTICES

Be a reference in Brazil's business community for its contribution to Sustainable Development. And be a global reference in the industry for its contribution to Sustainable Development.
2017 Result: 94%
2020 Target: 100%

RENEWABLE RESOURCES

Be a leading producer of chemicals and thermoplastic resins made from renewable feedstocks. And remain the world’s largest producer of thermoplastic resins made from renewable materials.
2017 Result: 82%
2020 Target: 100%

ENERGY EFFICIENCY

Be one of the world’s best chemical producers in energy consumption intensity and a major consumer of renewable energy.
2017 Result: 85%
2020 Target: 100%

GOVERNANCE & COMPLIANCE

Braskem believes that integrity and safety are the essence of a valuable, competitive and successful company. These principles ensure the perpetuity of the business and our reputation in the market.

Therefore, in 2017, we implemented various initiatives to improve our processes. One was the ongoing efforts in Compliance, a department created in 2016 that, this year, focused on boosting performance, expanding teams and reinforcing training programs and the dissemination of information.

2017 Highlights

23% increase in our performance in the integrity indicators defined and measured by the Ethos Institute.

Conducting a formal survey of over 2.800 Team Members in Brazil, United States, Mexico and Germany on their perspectives and comprehension of Braskem’s Compliance policies.

Formal and effective participation in the Anti-Corruption Working Group of the United Nations and in the Integrity Working Group of the Ethos Institute.

Election of another three new independent directors to serve on the company’s Board of Directors. With the change, the board now has six independent members out of a total of 11.

Disseminating guidelines/information and requiring 100% of Team Members to retake the training program on the Code of Conduct.

The Compliance team now has Compliance Officers for the USA, Europe and Mexico. The number of professionals dedicated to compliance has tripled: from 8 in 2016 to 27 Team Members in 2017.

Business Performance

In 2017, Braskem set new records for the production of certain key products, repeating its excellent industrial performance of recent years.

2017 Highlights

EBITDA: New record in Brazilian real (R$ 12 bi) and U.S. dollar (US$ 3.872), representing growth on the prior year of 7% and 17% (respectively).

Net Revenue: R$ 49.3 billion. 47% of this amount was generated in international markets, reinforcing the company’s global footprint.

Brazil: Resin sales volume in the Brazilian market came to 3.5 million tons, growing 4% on 2016.

Polyethylene: PE sales in Brazil grew 5% in the period, a new record for the Company.

Mexico: Braskem Idesa had an average capacity utilization rate of 88%, reaching the first million tons produced.

United States & Europe: Production growth of 5%, a new record for the Company.

INNOVATION

1 Center for the Development of Process Technologies in Mauá (São Paulo)

7 pilot plants

29 new patent applications and 83 extensions. Braskem currently has 501 active filings, 199 of which with patents granted.

296 Team Members 30114281

1 Renewable Chemicals Research Center in Campinas (São Paulo)

2 Technical Centers: Wesseling (Germany) and Coatzacoalcos (Mexico)

355 projects for the development of new products and processes

12.6% of the sales generated by the South America and Europe Polyolefins Unit were based on products developed by the Innovation team.

INNOVATIVE PRODUCTS & SOLUTIONS

MEG:
In a partnership with Haldor Topsoe, a Danish company specializing in catalysts and surface science, Braskem is developing a pioneering solution based on monoethylene glycol (MEG) from sugar. The component is used to make PET resin, an important resin for the textile and packaging industries that also is widely used to make bottles. The project involves the construction of a demonstration plant in Denmark, with startup slated for 2019.

Braskem Rigeo:
Developed especially for cleaning products, cosmetics and food industries, this new polyethylene resin offers high gloss and better finishing for packaging solutions.

Braskem’s Green Polyethylene in space:
In 2016, Braskem‘s Green PE is used for 3D printing in space in a project with Made In Space, a U.S. supplier to NASA. Now, with the solutions we developed, starting in 2018, astronauts on the International Space Station will be able to use a machine recycling packaging and plastic objects to extend the autonomy and sustainability of future space missions.

Braskem Labs:
In 2017, Braskem Labs grew to become an entrepreneurial platform with programs focused on accelerating innovative and sustainable businesses and solving the challenges facing the company’s businesses. The platform now is divided into Braskem Labs Scale, which accelerates more-mature entrepreneurs with solutions involving plastics or chemistry that feature socio-environmental impacts; Braskem Labs Challenge, which focuses on solving challenges facing Braskem itself; and Braskem Labs Ignition, which will accelerate startups still in the phase of validating their business models.

Life Cycle Assessment:
Braskem has been developing several projects based on Life Cycle Assessment (LCA), a technique in use since 2005 to evaluate environmental aspects and the potential effects linked to a product. From 2011 to 2017, 57 LCA studies were concluded and seven are underway.

Braskem Amppleo:
Designed especially for the production of high-performance foams, Braskem’s Amppleo is a high-melt-strength polypropylene resin (HMS-PP) capable of withstanding temperatures of up to 100°C without deforming. The product is used mainly in the automotive, industrial, packing, construction and home appliance industries.

Braskem Proxess e Flexus Cling®:
Solutions in polyethylene (PE) resins for making shrink films, Braskem Proxess products are designed especially for the food and beverage industry, which must protect cargo for transportation. Meanwhile, Braskem Flexus Cling® was designed for the production of stretch films, which are used mainly for their impact and puncture strength.

STAKEHOLDERS

Team Members

Braskem is a human-oriented company focused on the development of Team Members and on the pursuit of innovations to meet the needs of its stakeholders. We practice responsible management underpinned by trust and transparent dialogue with all stakeholders.

Diversity & Inclusion Program: respecting diversity means respecting people as they are, while valuing differences to create a workplace guided by collaboration and development. In keeping with our efforts to be a more inclusive company, in 2017, we created work fronts aimed at empowering groups that historically have been minorities. These include: Gender Equality, Race & Ethnicity, LGBTQIA (Lesbian, Gay, Bisexual, Transgender, Queer, Intersex and Asexual), Persons with Disabilities and Social & Economic (socially vulnerable people).

Furthermore, to encourage collaboration among Team Members, the Diversity & Inclusion Working Groups also were created with three fronts: Race & Ethnicity, Gender and LGBTQIA. In all, 90 Team Members work to support actions developed by the program and to act as multiplier agents.

Communities

In 2017, we reformulated all our social responsibility projects so that we could act more effectively in local communities.

Total investment in Brazil:

R$ 18,2 millions

39 projects

Over 144,000 people benefited in the area of education, culture and sports.

Global Volunteer Program: the pilot program engaged over 359 Braskem professionals from Brazil, Mexico and United States and 497 guest volunteers (friends and relatives of Team Members). Everyone participated in a collaborative competition that raised more than 18,000 items, which were donated to organizations located near Braskem's operations.

Ser+realizador: the project was repositioned to serve cooperatives located near Braskem, which now can count on the cooperative management services of the organization Mãos Verdes. With a smaller scope, the program was able to conduct a closer and more focused effort that resulted in more profound and lasting change. This year, over 1,278 collectors of recycled materials benefited from the program, and 35 cooperatives received technical consulting, training, equipment and infrastructure for total investment of R$ 1.9 million.

Suppliers

Braskem considers its suppliers essential links in the production chain and fundamental to ensuring its capacity to create value. That why we have a dedicated structure for analyzing items such as expenses, product and service quality and compliance with our Code of Conduct, seeking attitudes that are aligned with our ethics, social and safety principles.

Clients

With clients in many different industries, Braskem constantly seeks to maintain and expand its collaborative relations with partners.

Wecycle: Braskem’s platform for promoting the value of plastic waste in the production chain forged two important partnerships in 2017. The first, with the GPA Group, will enable the recycling of approximately 60 tons of plastic per year for the production of new packaging for the stain remover Qualitá, a brand of the retail chains Extra and Pão de Açúcar. And Muzzicycle, a Brazilian manufacturer of bicycles, will produce bike frames that contain resins made from waste from the cooperatives supported by the platform.

PICPLAST: Braskem’s initiative in partnership with the Brazilian Plastics Industry Association (ABIPLAST), the Plastics Chain Incentive Plan (PICPlast) supports exports of finished goods; fosters the sector’s competitiveness and innovation; and promotes the advantages of plastics. In 2017, more than R$30 million was invested in the program, which already has benefitted over eight million people during its three years of existence.

Government

Over the past few years, Braskem has enhanced its governance and compliance processes. Many different practices in our model for working with trade associations and the government have been improved and strengthened.

Among the topics included in our agenda of discussions is Reintegra, the government’s program to return to exporters a percentage of the taxes levied on sales to international markets. In 2017, this percentage was set at 2%, which was maintained in 2018.

SAFETY, HEALTH & ENVIRONMENT

R$ 112,1 million invested in Health, Environment and Safety projects in 2017.

R$ 109,8 million spent on treating wastewater and solid waste from industrial activities.

100% of audits of the Integrated Health, Environment and Safety System (SEMPRE) conducted.

Water Efficiency: 25,7% of the total water consumed by Braskem’s operations comes from reuse systems, an amount that surpasses the target set for the year of 25%. In the ABC Paulista region of Greater São Paulo, this rate reaches 97% of the total.

PreviousReports

Annual Report 2017

Celebrating a history full of achievements and challenges, in 2017, Braskem
commemorated its 15th anniversary with important accomplishments made
possible by a business strategy focused on expanding internationally into new
markets, capturing operating efficiency gains, constantly seeking innovative
solutions for clients, supported by its constant focus on people and on
enhancing its governance and compliance standards. The company
thus embarks on a new growth cycle supported by the aspiration
to become a global reference in the petrochemical industry.

The Annual Report covers the company’s relevant topics
for the period from January 1 to December 31, 2017,
and was prepared in accordance with the
framework of the Global Reporting
Initiative, version G4.

Profile

Sustainability Strategy

Since its founding, Braskem has sought to align its growth strategy with processes and initiatives that minimize any social and environmental impacts. As such, in 2016, we formulated our core strategy center around ten strategic macro goals linked to the 17 Sustainable Development Goals (SDGs) of the United Nations, and established targets for the results to be achieved by 2020. In 2017, we continued these efforts and met in advance the target for two very important aspects of the current environmental scenario: Water Efficiency and Climate Change. Read on to learn about all the macro goals and the progress made to date by Braskem:

Safety

Be a reference in the world chemical industry in chemical, occupational and process safety.
2017 Result: 98%
2020 Target: 100%

WATER EFFICIENCY

Be a reference in the use of water resources in the global chemical industry in water consumption and water reuse.
2017 Result: 100%
2020 Target: 100%

POST-CONSUMER WASTE

Be one of the world’s five largest sellers of polyvinyl chloride and polypropylene with recycled content among the petrochemical companies that manufacture polyolefins. And become a relevant driver of the growth in plastic recycling in Brazil, supporting the achievement of the targets of the Packaging Industry Agreement.
2017 Result: 1%
2020 Target: 100%

LOCAL DEVELOPMENT

Reach an "excellent" level of reputation in the Citizenship Dimension of the Retratam Pulse, demonstrating recognition by local Communities and Society in general for the contributions made to improving human development.
2017 Result: 81%
2020 Target: 100%

ECONOMIC-FINANCIAL
RESULTS

Be one of the world’s three largest thermoplastic resin producers, and guarantee profitability levels that sustain the perpetuity of the business and its investment grade rating from the three main international rating agencies.
2017 Result: 73%
2020 Target: 100%

CLIMATE CHANGE

Be one of the world’s best large chemical producers in terms of greenhouse gas emissions intensity, maintaining the use of renewable feedstocks.
2017 Result: 100%
2020 Target: 100%

DEVELOPING
SOLUTIONS

Be recognized as a company that supports its Clients in the development of environmental and social solutions in Chemicals and Plastics, achieving a “strong” level of reputation through its products and services.
2017 Result: 91%
2020 Target: 100%

STRENGTHENING PRACTICES

Be a reference in Brazil's business community for its contribution to Sustainable Development. And be a global reference in the industry for its contribution to Sustainable Development.
2017 Result: 94%
2020 Target: 100%

RENEWABLE RESOURCES

Be a leading producer of chemicals and thermoplastic resins made from renewable feedstocks. And remain the world’s largest producer of thermoplastic resins made from renewable materials.
2017 Result: 82%
2020 Target: 100%

ENERGY EFFICIENCY

Be one of the world’s best chemical producers in energy consumption intensity and a major consumer of renewable energy.
2017 Result: 85%
2020 Target: 100%

GOVERNANCE & COMPLIANCE

Braskem believes that integrity and safety are the essence of a valuable, competitive and successful company. These principles ensure the perpetuity of the business and our reputation in the market.

Therefore, in 2017, we implemented various initiatives to improve our processes. One was the ongoing efforts in Compliance, a department created in 2016 that, this year, focused on boosting performance, expanding teams and reinforcing training programs and the dissemination of information.

2017 Highlights

23% increase in our performance in the integrity indicators defined and measured by the Ethos Institute.

Conducting a formal survey of over 2.800 Team Members in Brazil, United States, Mexico and Germany on their perspectives and comprehension of Braskem’s Compliance policies.

Formal and effective participation in the Anti-Corruption Working Group of the United Nations and in the Integrity Working Group of the Ethos Institute.

Election of another three new independent directors to serve on the company’s Board of Directors. With the change, the board now has six independent members out of a total of 11.

Disseminating guidelines/information and requiring 100% of Team Members to retake the training program on the Code of Conduct.

The Compliance team now has Compliance Officers for the USA, Europe and Mexico. The number of professionals dedicated to compliance has tripled: from 8 in 2016 to 27 Team Members in 2017.

Business Performance

In 2017, Braskem set new records for the production of certain key products, repeating its excellent industrial performance of recent years.

2017 Highlights

EBITDA: New record in Brazilian real (R$ 12 bi) and U.S. dollar (US$ 3.872), representing growth on the prior year of 7% and 17% (respectively).

Net Revenue: R$ 49.3 billion. 47% of this amount was generated in international markets, reinforcing the company’s global footprint.

Brazil: Resin sales volume in the Brazilian market came to 3.5 million tons, growing 4% on 2016.

Polyethylene: PE sales in Brazil grew 5% in the period, a new record for the Company.

Mexico: Braskem Idesa had an average capacity utilization rate of 88%, reaching the first million tons produced.

United States & Europe: Production growth of 5%, a new record for the Company.

INNOVATION

1 Center for the Development of Process Technologies in Mauá (São Paulo)

7 pilot plants

29 new patent applications and 83 extensions. Braskem currently has 501 active filings, 199 of which with patents granted.

296 Team Members 30114281

1 Renewable Chemicals Research Center in Campinas (São Paulo)

2 Technical Centers: Wesseling (Germany) and Coatzacoalcos (Mexico)

355 projects for the development of new products and processes

12.6% of the sales generated by the South America and Europe Polyolefins Unit were based on products developed by the Innovation team.

INNOVATIVE PRODUCTS & SOLUTIONS

MEG:
In a partnership with Haldor Topsoe, a Danish company specializing in catalysts and surface science, Braskem is developing a pioneering solution based on monoethylene glycol (MEG) from sugar. The component is used to make PET resin, an important resin for the textile and packaging industries that also is widely used to make bottles. The project involves the construction of a demonstration plant in Denmark, with startup slated for 2019.

Braskem Rigeo:
Developed especially for cleaning products, cosmetics and food industries, this new polyethylene resin offers high gloss and better finishing for packaging solutions.

Braskem’s Green Polyethylene in space:
In 2016, Braskem‘s Green PE is used for 3D printing in space in a project with Made In Space, a U.S. supplier to NASA. Now, with the solutions we developed, starting in 2018, astronauts on the International Space Station will be able to use a machine recycling packaging and plastic objects to extend the autonomy and sustainability of future space missions.

Braskem Labs:
In 2017, Braskem Labs grew to become an entrepreneurial platform with programs focused on accelerating innovative and sustainable businesses and solving the challenges facing the company’s businesses. The platform now is divided into Braskem Labs Scale, which accelerates more-mature entrepreneurs with solutions involving plastics or chemistry that feature socio-environmental impacts; Braskem Labs Challenge, which focuses on solving challenges facing Braskem itself; and Braskem Labs Ignition, which will accelerate startups still in the phase of validating their business models.

Life Cycle Assessment:
Braskem has been developing several projects based on Life Cycle Assessment (LCA), a technique in use since 2005 to evaluate environmental aspects and the potential effects linked to a product. From 2011 to 2017, 57 LCA studies were concluded and seven are underway.

Braskem Amppleo:
Designed especially for the production of high-performance foams, Braskem’s Amppleo is a high-melt-strength polypropylene resin (HMS-PP) capable of withstanding temperatures of up to 100°C without deforming. The product is used mainly in the automotive, industrial, packing, construction and home appliance industries.

Braskem Proxess e Flexus Cling®:
Solutions in polyethylene (PE) resins for making shrink films, Braskem Proxess products are designed especially for the food and beverage industry, which must protect cargo for transportation. Meanwhile, Braskem Flexus Cling® was designed for the production of stretch films, which are used mainly for their impact and puncture strength.

STAKEHOLDERS

Team Members

Braskem is a human-oriented company focused on the development of Team Members and on the pursuit of innovations to meet the needs of its stakeholders. We practice responsible management underpinned by trust and transparent dialogue with all stakeholders.

Diversity & Inclusion Program: respecting diversity means respecting people as they are, while valuing differences to create a workplace guided by collaboration and development. In keeping with our efforts to be a more inclusive company, in 2017, we created work fronts aimed at empowering groups that historically have been minorities. These include: Gender Equality, Race & Ethnicity, LGBTQIA (Lesbian, Gay, Bisexual, Transgender, Queer, Intersex and Asexual), Persons with Disabilities and Social & Economic (socially vulnerable people).

Furthermore, to encourage collaboration among Team Members, the Diversity & Inclusion Working Groups also were created with three fronts: Race & Ethnicity, Gender and LGBTQIA. In all, 90 Team Members work to support actions developed by the program and to act as multiplier agents.

Communities

In 2017, we reformulated all our social responsibility projects so that we could act more effectively in local communities.

Total investment in Brazil:

R$ 18,2 millions

39 projects

Over 144,000 people benefited in the area of education, culture and sports.

Global Volunteer Program: the pilot program engaged over 359 Braskem professionals from Brazil, Mexico and United States and 497 guest volunteers (friends and relatives of Team Members). Everyone participated in a collaborative competition that raised more than 18,000 items, which were donated to organizations located near Braskem's operations.

Ser+realizador: the project was repositioned to serve cooperatives located near Braskem, which now can count on the cooperative management services of the organization Mãos Verdes. With a smaller scope, the program was able to conduct a closer and more focused effort that resulted in more profound and lasting change. This year, over 1,278 collectors of recycled materials benefited from the program, and 35 cooperatives received technical consulting, training, equipment and infrastructure for total investment of R$ 1.9 million.

Suppliers

Braskem considers its suppliers essential links in the production chain and fundamental to ensuring its capacity to create value. That why we have a dedicated structure for analyzing items such as expenses, product and service quality and compliance with our Code of Conduct, seeking attitudes that are aligned with our ethics, social and safety principles.

Clients

With clients in many different industries, Braskem constantly seeks to maintain and expand its collaborative relations with partners.

Wecycle: Braskem’s platform for promoting the value of plastic waste in the production chain forged two important partnerships in 2017. The first, with the GPA Group, will enable the recycling of approximately 60 tons of plastic per year for the production of new packaging for the stain remover Qualitá, a brand of the retail chains Extra and Pão de Açúcar. And Muzzicycle, a Brazilian manufacturer of bicycles, will produce bike frames that contain resins made from waste from the cooperatives supported by the platform.

PICPLAST: Braskem’s initiative in partnership with the Brazilian Plastics Industry Association (ABIPLAST), the Plastics Chain Incentive Plan (PICPlast) supports exports of finished goods; fosters the sector’s competitiveness and innovation; and promotes the advantages of plastics. In 2017, more than R$30 million was invested in the program, which already has benefitted over eight million people during its three years of existence.

Government

Over the past few years, Braskem has enhanced its governance and compliance processes. Many different practices in our model for working with trade associations and the government have been improved and strengthened.

Among the topics included in our agenda of discussions is Reintegra, the government’s program to return to exporters a percentage of the taxes levied on sales to international markets. In 2017, this percentage was set at 2%, which was maintained in 2018.

SAFETY, HEALTH & ENVIRONMENT

R$ 112,1 million invested in Health, Environment and Safety projects in 2017.

R$ 109,8 million spent on treating wastewater and solid waste from industrial activities.

100% of audits of the Integrated Health, Environment and Safety System (SEMPRE) conducted.

Water Efficiency: 25,7% of the total water consumed by Braskem’s operations comes from reuse systems, an amount that surpasses the target set for the year of 25%. In the ABC Paulista region of Greater São Paulo, this rate reaches 97% of the total.